Estimating and Analyzing Men's Labor Force Supply Function in Khuzestan
Message:
Abstract:
Labor force as a factor of production has always been the concern of economists. If a country is provided with abundant and cheep labor force, the significance of labor force in production will be more tangible. Therefore, the importance of analyzing labor market in Iran, due to having young and cheep labor coverage, is extremely necessary. Making use of statistics of participation rate, educational level as well as that of unemployment in Khuzestan during 1966-2003, we have tried to obtain men's supply function in this paper. Two dummy variables of "Islamic revolution" and "oil shock" are also considered in the model. To test the stationary of the variables, the ADF test is used. Also to test co- integration of the variables and to estimate the error correction model, Juhansen's method is used. The supply function is estimated by microfit and Eviews using OLS method and its validity is tested by LM and ARCH tests as well as distribution of disturbance terms. Results of the study show that in low age groups, educational variables such as educational coverage and the ratio of college-graduates adequately explain labor force participation rate. Unemployment rate is another variable that is crucial in labor force supply. This variable and its lags are generally positive for low age groups.
Language:
English
Published:
Quarterly Journal of Quantitative Economics, Volume:1 Issue: 2, 2004
Page:
2
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